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Oil prices ‘to plunge to $60’ by end of next year in boost for drivers

petrol price
petrol price

Motorists are poised to benefit from a sharp drop in fuel prices over the next 18 months, as analysts predict the cost of oil could fall to $60 (£47) a barrel.

The expectation of lower petrol prices has emerged in response to predictions that there will be a global oversupply of oil by 2030.

A glut of supply will force companies to lower prices with experts at Citigroup predicting crude oil will fall to $60 a barrel over the next 18 months, down from $80 today.

Not only will this make it cheaper to fill up at the pumps but it could also mean lower airfares as aviation fuel falls.

It comes after the International Energy Agency warned earlier this week that there would be a “staggering” excess of global oil supplies by 2030.

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Citi said the likely result would be a “very large surplus” by late 2025, fuelling a drop in the price of petrol and diesel.

While this will delight drivers, it will pile pressure on fossil fuel producers in the North Sea, which are already struggling against high taxes.

They were warned about further levies on Thursday after Labour unveiled plans to expand the windfall tax on oil and gas by a year to 2029 if it wins power at the general election.

This was alongside a proposed 3pc hike to the levy as well as the removal of the industry’s offshore tax breaks.

Sir Keir Starmer said in his manifesto that this would raise £8.3bn in taxes, which will be used to finance Labour’s Great British Energy project, a publicly-owned company focused on “delivering power back to the British people”.

The plan has been praised by green groups, although industry analysts have warned that the double-whammy of falling prices and higher taxes will make the North Sea the “world’s most hostile environment” for oil and gas operators.

Ashley Kelty, an oil analyst at Panmure Gordon investment bank, said: “Labour’s plans will leave the UK colder and poorer. It will make the North Sea the world’s most hostile environment for oil and gas operators – apart from those operating in war zones.”

He and others believe Labour’s plans will halt most new developments in the region, potentially including the Cambo oil field project in the west of Shetland.

Chris Wheaton, an analyst at Stifel, said Labour’s tax plans would “kill off the North Sea”.

He said: “There will be very little new investment and that means UK oil and gas output will decline very fast – much faster than demand. The UK will become increasingly dependent on other countries for more of its energy.”

Ed Miliband, Labour’s shadow energy secretary, said: “Labour is offering the country the most ambitious climate and energy plan in British history – investing in our country through Great British Energy so we can cut energy bills for good, make our country energy secure, create good jobs and protect our home for our children and grandchildren by tackling the climate emergency.”